Indians warm up to buying used cars online

Going to a showroom to buy a car might soon be a thing of the past.

From a pandemic that made people wary of visiting showrooms to a concerted effort by online marketplaces to woo shoppers, a perfect storm of factors is boosting the online sales of cars - especially pre-owned ones - in India.

That is a big deal in the world’s fourth-largest vehicle market where the penetration of e-commerce is still at a nascent stage in the automobile sector.

“Buying a car has a high touch-and-feel factor, is a big-ticket item and here the regret of going wrong is very high,” Droom Chairman and CEO Sandeep Aggarwal said, while elaborating on the factors that previously made it difficult for customers to even consider buying cars online.

“E-commerce in the automobile industry accounts for only 2 per cent, vis-à-vis other markets like travel, fashion, mobile phone, where the e-commerce penetrations are in double digits,” said Aggarwal.

That will change as more Indians shop for pre-owned cars from the comfort of their homes.

Online marketplaces such as Droom, CARS24, CarDekho.com and Spinny have been offering potential buyers a lot of incentives including a wider selection, competitive prices, money-back guarantees and even warranties which were not the norm in the used car industry.

Some of them are going a step further and providing a virtual showroom environment that offers a 360-degree view of the product to assuage customer concerns tied to the online purchase of a car without going to a dealership for a proper test drive.

Some are even offering doorstep test drives to bridge the gap.

Car dealerships in India have traditionally struggled to convince middle-class shoppers to invest in cars – an expensive item for most average Indian households – without test drives.

That is surely changing, especially since a lot of first-time buyers belong to a younger demographic.

As many as 31 per cent of Indians surveyed by Deloitte said they would prefer to buy their next vehicle through a partially or fully virtual process.

The frequency of individuals upgrading their cars through a complete end-to-end online platform has also substantially increased. Nearly 40 per cent of the respondents of a CARS24-IPSOS poll said they would prefer buying their next car online.

The trend has been boosting the fortunes of the online car marketplaces during the pandemic.

In 2020 and 2021, India saw as many as four online car marketplaces - CARS24, Droom, CarDekho.com, Spinny - joining the coveted club of startups valued at more than a billion dollars, popularly known as unicorns.

These marketplaces provide end-to-end services like online searches, purchasing, financing and insurance on a single platform making the online buying experience seamless for the consumer.

“From technologies in the car to technologies in the showroom, constant transformation is essential to remain relevant,” said Spinny Founder and CEO Niraj Singh.

The number of used vehicles sold against each new car is 2.2 now, up from 1.2 a few years ago, according to a CARS24 report.

Some analysts worried if the trend was here to stay.

“This is a new concept giving customers safety and comfort in these challenging times. However, this concept has its limitations as the customers would not be able to touch and feel the product. As Covid concerns diminish going ahead, in-person showroom visits would continue to be the preferred option,” said Arun Agarwal, Deputy Vice-president, Fundamental Research, Kotak Securities.

Watch the latest DH Videos here: